Singapore – The latest report by professional services firm KPMG Malaysia found that financial reporting in the Asia Pacific region is reported to have the slowest adoption pace, with only 29% of APAC companies adopting AI in financial reporting, compared to 39% in North America and 32% in Europe.
In this report, 10% of the companies have fully embraced artificial intelligence in financial reporting, while 72% are in the process of piloting or using it selectively. On the other hand, about 99% of organisations will incorporate AI into their financial reporting processes.
Furthermore, the report discovered that 64% of companies anticipate auditors to conduct a more detailed review of the control environment in relation to their use of AI in financial reporting.
It was also observed that approximately 52% of businesses want their auditors to prioritise predictive analysis. Another 47% further desire faster speed of delivery, and 45% seek real-time auditing throughout the year.
In addition, the survey revealed that employing AI results in enhanced productivity for the financial reporting team, along with increased talent acquisition and skill development. In particular, more than four out of ten companies were reported to have greater employee productivity and efficiency. The said figure is projected to increase to six out of ten within three years.
Interestingly, AI adoption posed significant challenges during the early stages, including data privacy concerns at 59%, limited AI skills and talents at 56%, poor organisational knowledge of AI at 51%, uncertainty about best use cases to prioritise at 41%, and difficulties with integrating with existing tools at 38%. These challenges will be alleviated as organisations improve their AI capabilities.
Foong Mun Kong, head of audit at KPMG Malaysia, said, “The growing adoption of AI in financial reporting signifies a transformative shift beyond mere technological advancements. The roles of auditors are being redefined as businesses are looking to their auditors to lead the AI transformation due to their deep understanding of financial reporting processes and their abilities to pinpoint areas where AI can add most value.”
“As a result, audits are shifting towards being more real-time and predictive, significantly transforming how insights are delivered,” he further explained.
Foong also noted, “AI advancements in financial reporting represent a triple win for companies, auditors, and information users by enhancing quality, boosting efficiency, and supporting more informed business decision-making.”
“At present, no jurisdiction, including Malaysia, explicitly requires auditors to perform assurance reviews of AI governance. However, I am confident that regulators and standard setters will keep pace with market expectations,” concluded Foong.
